By Björn Stigson
President of the World Business Council for Sustainable Development (WBCSD)

Energy, and our access to it, is at the core of the lives we live. Without it, we tend to do
poorly; with it, societies prosper and grow, and become ever more reliant on an abundant energy
supply. Energy is the single largest requirement for economic expansion, fuelling growth and
social development. Today, one billion people living in developed countries consume half of the
world’s energy supply, while 1.6 billion people do not have access to electricity.

Energy is essential to fuel industry, power infrastructure and to connect goods and services to
markets. Communities need it for basic services such as heating, lighting and cooking
fuel. There is no doubt that some of the world’s people have too little of it, and that
others waste far too much of it. By 2050, the world’s demand for energy could double as
populations rise and developing countries seek to increase the standard of living of their
people. Unchecked, an increased demand for energy will create an increase in greenhouse gas
emissions. This is why action on climate change is a priority for governments around the globe.

How we use and source energy in the future is critical as the world tries to find climate solutions
that foster sustainable economic and social development. To do this, we must reduce our reliance
on fossil fuels. I believe much of the climate solution will turn on how well, and how quickly, we
can improve our energy efficiency, develop low-carbon energy sources and deploy breakthrough
technologies such as carbon capture and storage. Energy efficiency measures, according to the
International Energy Agency (IEA), could account for half of the potential to halve carbon dioxide
emissions by 2050. We must make sure that we use all that potential.

Business knows that it will have to shoulder a big load when it comes to funding energy
technology. Already, it provides the lion’s share of the investment and financial flows
for developing and deploying technologies. The UNFCCC Secretariat has already said that the
money available under the UNFCCC and the Kyoto Protocol will not be enough, and the IEA estimates
that up to US$ 45 trillion will need to be invested up to 2050 in the global energy system.

As we all know, the current global financial turmoil means business is facing its own set of
challenges. However, this will not stop it investing in the search for climate
solutions. Business understands it has a role to play, and wants to protect and preserve its
future too. While business has the expertise, strategic thinking, innovative mindset and some of the
investment capital needed for the road ahead, what it lacks is clarity about the future climate
regime. Companies know that there will be winners and losers in the new climate
regime. They need as much certainty as possible about the conditions into which they will be
investing to reduce their risk of being among the losers.

At the World Business Council for Sustainable Development we work with some 200 of the world’s
leading companies. These companies are at the forefront of driving the technological
development and deployment that will be necessary. They tell us that not enough is being done to
encourage investment on the scale and within the time needed to propel the world towards a low-carbon
economy.

Many of the technologies that will be needed are already available, and all of these will be needed
in the climate solution. But new, breakthrough, clean energy technologies will be required
too. So there should be provisions in the new framework agreement that trigger and support a
reversal of the recent global decline in investment in energy research and development.

The agreement will also need to foster an unprecedented level of international cooperation on
technologies, because countries and companies will need to pool their resources if technologies are
to be brought to market quickly. To “push” the development of new technologies,
there will need to be some level of public investment, especially in early-stage demonstration and
deployment projects where the risks and costs may be too great for business to bear on its own.

Market mechanisms will need to be improved, and new ones created, to “pull” these
investments through the innovation chain (discovery, development, demonstration and deployment) to
generate revenue and enhance the flow of investments to developing countries. Carbon markets will
have an important role to play. Though they operate in many parts of the world, unfortunately
they are not yet delivering finance on the scale that will be needed in the coming decades. In
the new agreement, cap and crediting systems will need to be balanced, and the long-term goal should
be to create a demand that will become an incentive for the development of technologies that deliver
large-scale emissions reductions. In some sectors a carbon price will not be enough, and other policy
responses and mechanisms will be necessary.

One additional mechanism that business believes should be encouraged is sectoral
agreements. These would be satellites to the global agreement and should focus on activities
that cut emissions and support technology and financing within specific sectors. The focus
should be on either efficiency improvements or emission reduction incentives, or indirectly through
such actions as investing in specialized low-carbon technology for future use. These kinds of
projects could help developing countries by introducing new infrastructure and technologies, and at
the same time building the skills and competencies needed to get full benefit from them.

There is a lot to do before COP15 in Copenhagen in December. Efforts need to be directed towards
overcoming the policy, institutional and financial barriers to the spread of low-carbon energy
technologies around the world. Strengthening the protection of intellectual property rights will
be essential if business is expected to invest in innovation at the required level.

Business understands that we are all in this together and wants to get on with working, planning and
investing for the future. The world can move to a low-carbon economy, but it will require a great
deal of working together in Copenhagen and elsewhere. We cannot allow ourselves to
fail.

About the WBCSD
The World Business Council for Sustainable Development (WBCSD) is a unique, CEO-led, global
association of some 200 companies dealing exclusively with business and sustainable development. The
Council provides a platform for companies to explore sustainable development, share knowledge,
experiences and best practices, and to advocate business positions on these issues in a variety of
forums, working with governments and non-governmental and intergovernmental organizations. For more
information on the WBCSD see: www.wbcsd.org